Whereas external auditing caters for outsiders of the entity whose financial statements are being audited, internal auditing is takes care of the management of the reporting entity.
Internal auditing is an appraisal system established by management for the review of the accounting control systems as a service to the entity. It is an objective, consulting and value adding activity that, among other things, aims:
- At improving the efficiency and effectiveness of the operations of the reporting entity
- To ensure safety of the reporting entity’s assets
- Compliance with regulatory and legal frameworks as well as internal operating procedures in order to reduce resulting risks.
We undertake financial and compliance audits as described below:
- Financial audits. This refers to the review of accounting and other records to to substantiate figures appearing in financial statements and/or management accounts. Financial audits also look into internal controls therefore helps in identifying their weaknesses, reduction of risks and recommend their improvement.
- Operational audits. Here, the objective is to establish whether the internal control procedures/processes are functioning as they should, efficiently and effectively.
- Compliance audits. These audits are intended to ensure that the entity plays by the rule and regulations as set out in the applicable legal frameworks that govern them i.e. the laws and regulatory authority(ies)’ rules. Failure to comply with the legal frameworks increases the risk of legal and regulatory actions.
Benefits of internal audit are, but not limited to:
- It helps management to monitor the effectiveness of the entity’s internal controls. Internal controls refer to the processes (financial or otherwise) instituted by an entity’s management, board of directors or other responsible personnel to provide reasonable assurance regarding the achievement of its objectives with regard to effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations.
- It ensures resources are used effectively and efficiently. This increases the entity’s competitiveness in the market.